Combined L&T Infotech-Mindtree Starts Operations

L&T Infotech Ltd. and Mindtree Ltd. have received approval from the National Company Law Tribunal for a merger and will start operating as LTIMindtree from Monday.

LTI-Mindtree, with a workforce of 90,000 professionals spread over 30 countries and across five continents, will be the fifth largest IT services company in India by market value.

"...both the companies have filed Form No. INC-28 with the Registrar of Companies, Mumbai and Bengaluru, respectively, today, i.e., Nov. 14, 2022, and accordingly, the scheme has become effective from Monday," L&T Infotech said in its exchange filing.

The boards of both companies have fixed Nov. 24 as the record date for the allocation of shares of the merged company to eligible shareholders.

In May 2022, the boards of directors of LTI and Mindtree approved at their respective meetings, a composite scheme of merger of the infotech companies under the Larsen & Toubro Group and created a combined entity with a revenue of more than $3.5 billion. Engineering and construction major L&T officially acquired a controlling stake in Bengaluru-based Mindtree in 2019.

According to AM Naik, group chairman L&T and chairman LTIMindtree, "As part of the merger, the Mindtree shareholders will receive 73 shares of LTI for every 100 shares of Mindtree held by them."

The parent L&T will hold 68.73% of the merged entity. Mindtree will get delisted from the exchanges, and LTI will get rebranded as LTIMindtree from Nov. 24, Naik said.

The amalgamation will see the two companies form LTIMindtree, a merged entity with a client portfolio comprising 750 global enterprises from key industry verticals.

"The highly complementary strengths of LTI and Mindtree make this integration a win-win proposition for all our stakeholders—clients, partners, investors, shareholders, employees, and communities—furthering L&T’s tradition of innovation, excellence, trust, and empathy," said Naik.

According to Naik, LTIMindtree, which will be headquartered in Mumbai, will leverage the strengths of the two companies going forward and achieve revenues in excess of $6 billion by FY24.

“The combined revenue of the two companies at present is $5.2 billion, which we are hopeful will reach up to $6.3 billion by next year,” Naik added.

Naik expects that IT services, which includes the engineering services business, will contribute 26% to the total revenue of the parent company.

There are not many overlaps between the two companies, Debashish Chatterjee, the new CEO and managing director of LTIMindtree, said.

“Out of our total base of 750 customers, we only have 10 to 12 account overlaps, which is negligible,” he said. “There are more synergies between the two companies than overlaps, both in terms of accounts and locations.”

LTIMindtree will help businesses proactively take on and shape the future by harnessing the power of digital technologies. "LTIMindtree brings the comprehensive offerings and cumulative experience of five decades to help companies deliver impact and get to the future faster,” Chatterjee said.

The company has a 14.5% to 15% net profit margin, which will be sustained, Chatterjee said.

However, given the current global macroeconomic scenario due to the Ukraine war and subsequent cost cutting by clients, there is a belief that the situation (cost-cutting by clients) will persist, but the merged entity has the strength to better withstand the global pressures, he added.

Shares of L&T Infotech and Mindtree closed 2.04% and 2.61% higher, while the benchmark Nifty 50 ended 0.11% lower on the NSE.

Watch | LTIMindtree CEO talks about the company's growth plans going forward